On January 2 2011 the Jackson’s Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residuals value of $30,625. The expenditures made to acquire the assets were as follows

On January 2 2011 the Jackson’s Company purchased equipment to be used in its manufacturing process. The equipment has an estimated life of eight years and an estimated residuals value of $30,625. The expenditures made to acquire the assets were as follows

Purchase price……………………………..$154,000

Freight charges………………………………...2,000

Installation charges…………………………….4,000

Jackson’s policy is to use the double declining balance DDB method of depreciation in the early years of the equipment’s life and then switch to straight line halfway through the equipment’s life.

Calculate depreciation for each year of the assets eight year life.

Discuss the accounting treatment of the depreciation on the equipment.

Answer rating: 100% (QA)

Cost of the equipment Purchase price 154000 Freight charges 2000 Installation charges 4000 160000 St... View the full answer